Experts from the research and brokerage firm, Bernstein, have opined that the recent decline in Bitcoin, which saw about a 25% drop from its October 6 peak of approximately $126,000, signifies a brief correction rather than the inception of a major slump. This perspective was expressed in a note to Bernstein’s clients in which the team, led by Gautam Chhugani, shared their view on the current scenario.
The Four-Year Cycle
Investors have been familiar with a historical 4-year cycle pattern for Bitcoin, with earlier peaks observed in 2013, 2017, and 2021. This pattern has brought about apprehension, leading many investors to sell in anticipation of similar fourth-quarter weakness in 2025. The analysts, however, believe this creates a kind of self-fulfilling prophecy.
Current Backdrop is Stronger
According to Bernstein’s analysts, the current scenario is fundamentally stronger and portrays a relatively shallow correction rather than a 60% to 70% decline as seen in previous patterns. They underscored the absorption of the long-term holder supply, citing that a considerable amount of Bitcoins – around 340,000 BTC or about $38 billion sold by holders in the past six months – has been absorbed by $34 billion flowing into spot ETFs and corporate treasuries.
Despite its hiccups, Bitcoin is holding steady for the year, and shows an approximately 100% increase over the past three years.
Institutional Ownership Encouraging
Data shows that the institutional ownership of Bitcoin ETFs witnessed an overall rise of 8% from 20% at the end of 2024 to 28% presently. Assets under management of total ETFs have hit $125 billion, even with $3 billion of outflows in the past three weeks. The analysts believe this shift indicates higher quality and consistent ownership, which reduces the chances of a deeper sell-off.
Strategy’s Bitcoin Asset
There has been speculation around the firm Strategy (formerly MicroStrategy) potentially having to liquidate its Bitcoin assets if prices continue to fall. However, the analysts highlighted that Strategy’s administration has confirmed it isn’t intending to sell any bitcoins. The firm’s leverage remains conservative, and dividends are well covered by its treasury and the ability to access more capital through its at-the-market programs. This leads the Bernstein analysts to predict that Strategy will continue purchasing Bitcoins throughout this market correction.
Tailwinds Remain Intact
Moreover, the analysts refer to the continuing structural tailwinds, stating strong political backing for cryptocurrency under the Trump administration as a strategic priority, and the anticipation of Clarity Act market structure legislation progressing by late 2025 or early 2026. A favorable liquidity environment, signaled by declining rates, further supports the bullish outlook.
Crypto-Equity Performance
The analysts further highlighted impressive crypto-equity performance in the third quarter, with Coinbase, Robinhood, Figure, and Circle all surpassing expectations. This, they believe, symbolises robust institutional engagement in tokenization and stablecoins.
A Multi-Year Positive Trend
The Bernstein team argued that the current market scenario doesn’t feel like it is at the peak of a cycle, but rather part of a multi-year trend characterized by institutional participation and recurring moderate corrections. They are looking to see if Bitcoin can establish a bottom near the $80,000 range, as seen after last year’s U.S. election, and consider the present setback as potentially presenting an attractive entry point to digital assets and equities.
Gautam Chhugani, a leading voice in these analyses, maintains long positions in various cryptocurrencies.
